Student Loan Debt Facts – Key Credit Blog

Posted by Nikitas Tsoukalis on October 2, 2014

Student Loan Debt Facts – Key Credit Blog

When you are trying to repair credit and open up new opportunities, nothing can slow you down like late or defaulted student loans. Learn more about this widespread type of debt and how it affects the finance picture for millions of American adults.

Student Loan Debt Is Huge

Americans owe more on student loans than they do on credit cards. The US student loan debt has risen to over $875 billion. That’s larger than the economies of over 200 countries.

Seven Million People Have Defaulted Loans

Of the 40 million Americans who have student loans right now, 7 million are in default. This can do a number on a person’s credit score, substantially limiting their ability to buy a home, qualify for certain jobs or get an auto loan.

As Many As 44% of Loans Are 90 Days Past Due or More

The federal government only tracks the numbers of defaults, so, there are no hard numbers available for past-due loans. But, the Student Loan Ranger estimates, based on aggregate data, that almost half of all loans are either 90 days past due or under deferment.

New College Grads Have a 9% Unemployment Rate

That’s fully 3% higher than the average unemployment rate in the US. The six-month grace period after graduation goes by fast. Without a job, many grads find payments unaffordable and wind up with debt management issues soon after graduation.

It’s Hard to Make Student Loan Debt Go Away

Student loans can’t be discharged in a bankruptcy, which makes credit repair difficult if you do not have the funds. They usually can’t be negotiated down like other debts, either. And, even though they are typically sold to collection agencies for pennies on the dollar, Sallie Mae refused to sell the debt to Strike Debt when they learned that the organization wanted to forgive the loans. Strike Debt did, however, manage to buy and forgive over $3 million in for-profit college debt in their September Rolling Jubilee.

Loan Payments Can Be Negotiated

If you only follow one of our credit tips, choose this one: do not be afraid to negotiate your student loan payment. If your loan is currently held by a collection agency, they have to accept reasonable offers. Loans that are in regular repayment may be eligible for alternate payment plans. While student loan debt can be a substantial burden, it does not have to end your dreams of economic opportunity. Educate yourself about your options and create a repayment plan that works with your means.